End of refinery labor strike could mean cheaper gas in California

Gary Roth, a gasoline refining operator, walks the picket line with fellow Tesoro Refinery workers on 223d St. on Feb. 23, 2015 in Carson, Calif. The Carson oil refinery provides a local look at the national refinery strike - which isn't about money. Workers complain of crushing workloads and long hours that create a safety hazard. (Don Bartletti/Los Angeles Times/TNS)

The United Steelworkers union reported Thursday that it had reached a tentative contract agreement with oil company negotiators in the strike, which has dragged on for nearly six weeks.

“We salute the solidarity exhibited by our membership,” said union President Leo Gerard. “There was no way we would have won vast improvements in safety and staffing without it.”

Although workers picketed 15 refineries and chemical plants across the country, only the Martinez facility shut down. Its closure at the start of February knocked out 8 percent of the state’s refining capacity.

That triggered a gas price spike that only accelerated after an explosion rocked an Exxon Mobil refinery in Torrance, near Los Angeles, on Feb. 18. The blast and the strike cut gasoline supplies at a time of year when California refineries reduce production, perform maintenance and switch to making warm-weather fuel blends. A brief rally in crude oil prices also contributed to the spike. The California average for regular gas jumped $1 in just over a month, from $2.43 at the end of January to $3.44 last week.

“There were two refineries down in California, and the market acted really chaotically,” said Allison Mac, West Coast petroleum analyst for GasBuddy.com. “We were freaking out after the explosion in Torrance.”

California typically has some of the nation’s highest gasoline prices, the result of steep taxes and the state’s reliance on unique, pollution-fighting fuel blends different from those used in other states. In addition, starting in early January, California’s cap-and-trade system to rein in greenhouse gas emissions added roughly 10 cents per gallon to the state’s gasoline prices, analysts estimate.

The oil market rally sputtered out in mid-February, and recent reports from the state and federal government have shown that California has enough gasoline to meet demand. The state’s gasoline prices are already drifting lower, dropping about 4 cents in the last week, and will likely fall more once Tesoro’s Martinez refinery resumes production.

The timing is not certain.

The Steelworkers union reached a tentative agreement on a four-year contract with representatives of Royal Dutch Shell, who were negotiating on behalf of the oil industry. Each individual company and its workers must now reach formal agreement on those terms.

Tesoro — based in San Antonio — supports the agreement, the company’s executive vice president of operations, Keith Casey, wrote in an e-mail to employees on Thursday. The company decided to close the Martinez site during the strike because half of it was already shut down for maintenance. But that work is now complete, Casey wrote.

“The bottom line is the hardware is ready, and once we successfully get the workforce back, we will be in position for the safe and efficient restart of the facility,” Casey wrote.

He noted, however, that the process of bringing the striking employees back to all of Tesoro’s facilities will take time. Local issues must still be resolved and ratified by the union members, he said.

“While our objective is to have this completed as promptly as possible, it is important to do it right, so it will not be immediate,” Casey wrote.